September 29, 2012 (Switzerland)
Remei AG releases annual report for 2011 / 2012 period. Patrick Hohmann, Managing Director of Remei AG says that it is no longer a secret: the hype about organic- cotton farming in India is ebbing away, partly due to the measures taken by India’s official monitoring agencies.
Organic farming has come under more stringent scrutiny following negative reports in the press. All farmers now need to be mapped in Tracenet, a tool for the traceability of organic cotton. This means a massive increase in administrative effort for our projects, as mentioned in our 2009/2010 Annual Report. Though regrettable, the loss of image is good for honest and transparent organic farming.
According to Textile Exchange, organic farming in India decreased by 48% in 2010/2011. A more pronounced downturn is to be expected in the year to come.
Does this mean that organic farming should be dropped altogether? No, not at all. It is much rather a question of markets. Major vendors are planning to cover a minimum of 50% of their supplies with sustainable cotton by 2020. However they entered a market driven by hype. They forgot to test projects for sustainability, and considered certificates to be sufficient.
While we were desperately looking for seeds that were not genetically modified, incurring steadily rising cost, the market of organic cotton evolved at ridiculous price premiums.
As soon as those vendors realised that it took more than certificates to produce organic cotton, they changed their procurement policies and started to rely on such initiatives as BCI, the Better Cotton Initiative. BCI is a movement certainly worth supporting, but clearly short of meeting the requirements and implications of organic farming. It is an initiative merely aimed at reducing the use of harmful pesticides and insecticides, but not subject to any checks.
The result is a major shake-out in the market that will eventually be survived by those who are genuinely committed to organic farming and securing the long-term livelihood of farmers and their families, as well as those aiming to strike a balance between the forces of nature, based on human needs.
This is exactly what we intend to continue to do. We welcome all our clients, farmers, staff, shareholders and everyone else who is prepared to join us on this journey.
We did our best, but circumstances would not allow us to reach our goals. We wanted to grow, but we only managed to produce reasonable results.
Certainly the strong Swiss franc was a problem for us as we generated a great deal of our sales in US dollars, a currency that everyone knows lost a considerable amount of its value. Add to this the loss of value that cotton suffered.
In the year before, the value of cotton had risen fivefold. In the meantime, it has settled in at around 40% of its peak price, as expected. We had to buy up the entire crop in India when prices were high, but were unable to raise our prices because cotton prices dropped subsequently.